Will Other Nations Emulate American-Style Prosperity?
January 27, 2000
Other countries are envious of the wonders of America's new economy and would like to have their economies work just as well. But there are still widespread misgivings about the U.S. model of free-market capitalism. Policy-makers abroad want the benefits of capitalism, they just don't want capitalists to produce them, some analysts note wryly.
For those willing to take the plunge, however, here are some suggestions from analysts:
- Boost investment spending on information technology and allow corporations to restructure with the aim of cutting costs and increasing productivity.
- Unshackle financial markets, while developing venture capital markets.
- Encourage an entrepreneurial culture and make it easier to start new businesses by cutting through governmental red tape.
- Increase the pace of deregulation -- especially in telecommunications and labor markets.
There are encouraging signs already visible. Even in the developing country of India, the software industry is growing at a rate of 50 percent to 60 percent a year. Corporate restructuring has begun in Europe and Asia, financial markets are being rebuilt to support innovation, and there is more willingness to take risks, observers report.
The Information Revolution is making valuable data available instantaneously worldwide. Historically it has taken years, if not decades, for even the most important and technological innovations to spread across national borders.
But investments in risky innovation depend on open global markets -- since national markets do not provide a big enough payoff for taking big risks.
Source: Michael J. Mandel, "The New Economy," Business Week, January 31, 2000.
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